Labour has defended the rise in the number of university places that happened while it was in power.

Shadow higher education minister Shabana Mahmood said more graduates would help Britain compete with emerging economies.

Her remarks came in a lecture to the University Alliance group of business-focused universities.

Libby Hackett, of University Alliance, said the recession had increased demand for highly qualified employees.

Ms Mahmood told an invited audience that she wanted to debunk the myth that the value of a degree had declined since the growth in the numbers of graduates and universities.

She drew on recent government figures that showed 90% of graduates were either in work or further study six months after graduating.

She said that even lower performing universities such as University College Birmingham in her own constituency had a graduate employment rate of 81% , which compared with 57% for the population of the constituency as a whole.

But she said that the drop in applications to university this year, the first when students will pay higher fees, was a cause for concern.

She said: "The government's reforms are going in the wrong direction, applications to university have dropped by 8.9% since last year, there have been falls in applications for degrees in science, technology, engineering and maths and from mature students."

A spokesman for the Department for Business Innovation and Skills said: "The proportion of English school leavers applying to university is the second highest on record.

"We expect record numbers of full-time students at university this summer and it's still not too late to apply. Last year 30,000 students applied after this point.

"However, even with a small reduction in applications, this will still be a competitive year like any other as people continue to understand that university remains a good long-term investment in their future.

"Our reforms put students at the heart of the system and university funding on to a sustainable footing"

Ms Mahmood added that it was important universities put students' future employability at the heart of what they did.

She called on them to build better networks among recent alumni and to use mentoring to boost undergraduates' emotional resilience in readiness for the jobs market.

Ms Hackett, said that Alliance universities were "deeply committed" to helping graduates into employment.

"There is a long term issue about how many graduates are needed in our economy."

"The impact of technology and how it changes the nature of so many jobs means there is a need for more graduates"

She added that recent research had shown that the recession combined with technology had created an "hourglass economy".

This meant more high-wage, abstract, non-routine jobs and more low-wage, service and manual occupations - but a squeeze on middle-wage, routine jobs.